The US Fed plans to launch its own cryptocurrency

The Federal Reserve (Fed) of the United States is seeing the possibility of creating its own Central Bank Digital Currency (CBDC), in its analysis of digital currencies and payments, revealed Lael Brainard, one of the governors of the Fed.

This Wednesday, February 5 at the “Digital Currency Conference” at the Stanford School of Business, Brainard said the Federal Reserve is examining the possibility of more value and convenience at a lower cost, and one of the options on the table is the creation of its own CBDC type cryptocurrency.

What is a CBDC?

The CBDC, or Central Bank Digital Currency, seeks to be a stable currency (“stablecoin”) controlled by the central bank of a certain country. This differs with cryptocurrencies based on open and public blockchains in a couple of main aspects:

(1) it is centralized; that is to say, the central bank is the one that controls the rules of the game unilaterally, and

(2) because it is a “stablecoin”, it is sought that the value of the cryptocurrency is tied to the value of another asset, usually a fiat currency, or a set of them.

This comes after even in May 2018, Brainard herself said at a cryptocurrency conference that “there is no need for a digital currency issued by the Fed.”

Did Libra Make a Difference?

The change of opinion may have arisen due to the announcement of the launch of Libra , a cryptocurrency that a subsidiary company of Facebook announced in June 2019. As a result of this announcement, the regulators soon expressed their concerns about consumer protection regarding threats to the privacy of your information. Brainard said that the project “imparted urgency” to the conversation of digital currencies.

Other comments about digital currencies that have been made in the past also stack up. For example, since 2018, Christine Lagarde, now president of the European Central Bank, said CBDCs could “meet the objectives of public policies, such as financial inclusion and consumer safety and security; and to provide what the private sector cannot: privacy in payments ».

A few months ago, two members of the US Congress, French Hill and Bill Foster, wrote a letter to Jerome Powell, current president of the Federal Reserve if he was prepared for the emergence of digital currencies. They encouraged the Fed to examine the possibility of creating its own digital currency, as the US dollar could be displaced by cryptocurrencies and private stablecoins.

If they don’t, China will do it

An additional consideration to this Fed movement is the fact that it is competing for the Bank of China (PBoC) that are already in active development to create their own digital currency. This argument was even used by Mark Zuckerberg when he was called to appear before US regulators regarding the Libra project.

survey of the Bank for International Settlements (BIS) to 63 central banks throughout the world done in 2018, reflects that 80% of banks were investigating or initiating a proof of concept for digital currencies, although most were not ready to launch

Last week, the National Bank of Cambodia announced that it planned to launch its own CBDC currency sometime during the fiscal quarter.

There are already six central banks, including the central banks of the United Kingdom and Japan, as well as the Central Bank of the European Union, which formed a working group in January to collaborate and investigate issues related to CBDCs. It was reported that they will have their first meetings in April of this year.

Source: https://crcoinico.com/blog/2020/02/07/la-fed-de-estados-unidos-planea-lanzar-su-propia-criptomoneda/

Author: https://crcoinico.com/blog/author/danielrojas/

Image: https://crcoinico.com/blog/wp-content/uploads/2020/02/federal-reserve-CBDC-300×169.jpg

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